The Directors have pleasure in presenting the 32nd Annual Report of your Company along with the Audited Financial Statements for the financial year ended March 31, 2017.

1. Financial highlights:

Rs. Million

Particulars

Consolidated

Standalone

FY 2016-17 |

FY 2015-16

FY 2016-17 FY 2015-16

Revenue from Operations

57,705

52,968

52,608

46,716

Other Operating Income

8,701

6,271

4,608l

2,526

Other Income

8061

904

719l

1,184

Total Revenue

67,21ll

60,143

57,935|

50,426

EBITDA

16,6391

16,831

14,4141

13,858

EBITDA Margin (%)

28.841

31.78

27.401

29.66

Finance Cost

1,583l

2,368

8721

1,539

Depreciation and amortisation

5,054|

3,718

4,663

3,258

Profit before exceptional items and tax

10,0031

10,745

8,879l

9,061

Exceptional items (Net)

4,648l

-

4,606!

-

Profit before tax

5,355|

10,745

4,2731

9,061

Tax Expense

1,731|

3,254

1,208|

2,578

Profit for the year

3,624l

7,491

3,066l

6,483

Earnings per share (Basic & Diluted)

3.56

7.33

3.05

6.45

2. Performance and Outlook:

During the year under review, your Company’s total revenue on standalone basis increased to Rs.57,935 million, a growth of 14.89% and on consolidated basis it increased to Rs.67,211 million, a growth of 11.75% over the previous year. Substantial portion of this revenue is attributable to replenishment orders from majority of the customers. The EBITDA on standalone basis was Rs.14,414 million i.e. 4.01% higher than last year and on consolidated basis was Rs.16,639 million i.e. 1.14% lower than last year. EBITDA margin is lower mainly due to cost of raw material, higher cotton prices and energy costs coupled with expenses relating to brand building and innovation. Profit before exceptional item and tax is Rs.8,879 million i.e. 2.01% lower than last year on standalone basis and is Rs.10,003 million i.e. 6.90% lower than last year on consolidated basis. Exceptional items of Rs.4,606 million is pertaining to traceability issue and costs incidental thereto. Profit after tax is Rs.3,066 million i.e. 52.72% lower than last year on standalone basis and Rs.3,624 million i.e. 51.62% lower than last year on consolidated basis.

You may refer to ‘Management Discussion & Analysis’ Section of this Report for further details of your Company’s performance.

Your Company has come up with industry defining traceability solution titled as “Wel-Trak”. Your Company’s management believes “Wel-Trak” will be path-breaking for home textile industry. Wel-TrakTM is an industry-defining, patent-pending, multi-level traceability process to provide customers and consumers with a reliable and quick verification tool to track the finished products back to farms. Features of Wel-TrakTM are:

Welspun is able to monitor and control the movement of cotton across the various stages of production process. We are able to track and trace all types of cotton in-house via a pioneering end-to-end, technology-enabled traceability solution through deployment of:

1. Automated data capture hardware;

2. Customized software for validation which enable data traceability;

3. Robust IT & ERP systems to enable smooth operations across all stages of production and

4. Physical and systems controls to strengthen the tracking process.

3. Dividend:

i. Dividend Distribution Policy:

The Board of Directors approved Dividend Distribution Policy of the Company, as required under Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Regulations 2015”). Your Company has a dividend policy to pay 25% of Profit after Tax on standalone basis. The Policy is attached as Annexure - 1 to this Report and it is also available on your Company’s website and the web link thereto is as given below. http://www.welspunindia.com/policy/WIL-Dividend%20Distribution%20Policy.pdf

ii. Dividend for Financial Year 2016-17:

Considering your Company’s performance during the Financial Year (“FY”) 2016-17, the Board of Directors has recommended, for approval of the members, a final dividend of Rs.0.65 per share (face value of Rs.1 per share) for FY 2016-17. The dividend, if approved by the members, would result in cash outflow of Rs.786.04 million including Dividend Distribution Tax (“DDT”).

Dividend will be paid to those members, who will hold shares on the last day of book-closure i.e. June 28, 2017.

A snapshot of the dividend track record of your Company for previous financial years is given below.

Rs. Million

Total

Cash Outflow

Financial Year

Dividend

(including

(%)

DDT)

2016-17

65%

786.04

2015-16

130%

1,558.47

2014-15

105%

1,268.47

4. Subsidiaries:

A report on the performance and financial position of each of the subsidiary companies of your Company is included in the consolidated financial statement presented in Form AOC-1 attached as Annexure - 2 to this Report.

Your Company’s policy on Material Subsidiary as approved by the Board is hosted on your Company’s website and the web link thereto is as given below. http://www.welspunindia.com/policy/material_subsidiary_policy.pdf

5. Auditors and Auditors’ Report:

i. Statutory Auditors:

Your Company’s Auditors, Price Waterhouse Chartered Accountants LLP, have to be rotated pursuant to third proviso of Section 139(2) of the Companies Act, 2013 (“the Act”).

The existing auditors have submitted their audit report on financial statements of the Company for FY 2016-17. The auditors’ observation read with Notes to Accounts are self-explanatory and therefore do not call for any comment.

The Board of Directors recommends appointment of S R B C & CO LLP (having Firm Registration Number 324982E/ E300003) as the Statutory Auditors of the Company for a term of consecutive five years commencing from the conclusion of 32ndAnnual General Meeting till the conclusion of 37th Annual General Meeting.

S R B C & CO LLP is a firm of Chartered Accountants registered with the Institute of Chartered Accountants of India.

It is a member firm of EY Global. It was established in the year 2002 and is a limited liability partnership firm incorporated in India.

S R B C & CO LLP is holding a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. Members are requested to approve their appointment as the Auditors of your Company by passing an ordinary resolution under Section 139 of the Act.

ii. Cost Auditors:

As per Section 148 and other applicable provisions, if any, of the Act read with Companies (Audit and Auditors) Rules, 2014, the Board of Directors of your Company has reappointed M/s. Kiran J. Mehta, Cost Accountants as the Cost Auditors of your Company for FY 2017-18 on the recommendations made by the Audit Committee.

Members are requested to ratify their remuneration by passing an ordinary resolution in the forthcoming Annual General Meeting.

iii. Secretarial Auditor:

The Secretarial Audit Report for FY 2016-17 is attached herewith as Annexure - 3 to this Report and it does not contain any qualification, reservation or adverse remark.

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Uday Sohoni, Practicing Company Secretary, as the Secretarial Auditor of your Company for the FY 2017-18.

During the year, no share with differential rights was issued by your Company nor did your Company issue any equity share as sweat equity share.

ii. Issue of employee stock options:

There were no stock options outstanding at the start of the FY 2016-17.

7. Disclosure of Shares held in suspense account:

Aggregate number of shareholders and the outstanding shares in the suspense account lying at the beginning of the year

Number of shareholders who approached issuer for transfer of shares from suspense account during the year

Number of shareholders to whom shares were transferred from suspense account during the year

Aggregate number of shareholders and the outstanding shares in the suspense account lying at the end of the year

No. of Holders

No. of Shares

No. of Holders

No of Shares

No. of Holders

No. of Shares

No. of Holders

No. of Shares

3,866

1,370,850

18

8,610

18

8,610

3,848

1,362,240

The voting rights on these shares shall remain frozen until the shares have been claimed by and transferred to the rightful owner.

8. Listing with the Stock Exchanges:

Your Company’s equity shares are listed on Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE). Annual listing fees for the FY 2017-18 have been paid to BSE and NSE.

9. Finance:

i. Credit Rating:

During the year, your Company’s long term credit rating of AA-’ and short-term credit rating of A1 ’ has been reaffirmed by CARE. Further, your Company’s long-term issuer rating of ‘IND AA-/stable’ and short-term credit rating of ‘IND A1 ’ has been reaffirmed by India Ratings & Research, a Fitch Group company.

ii. Deposits:

Your Company has not accepted any deposit within the meaning of the Chapter V of the Act. Further, no amount on account of principal or interest on deposit was outstanding as at the end of the year under Report.

10. Board of Directors:

Your Company’s Board comprises of mix of Executive and Non-Executive Directors with considerable experience and expertise across a range of fields such as finance, accounts, legal, management and business strategy. Except the nominee appointed by IDBI Bank and the independent directors, all other directors are liable to retire by rotation as per the provisions of the Act. It is confirmed that, except for Mr. Balkrishan Goenka and Ms. Dipali Goenka who are husband and wife, there is no relationship between the directors inter-se. The details of the Directors, their meetings held during the year and the extracts of the Nomination and Remuneration Policy has been given in the Corporate Governance Report, which forms part of this Report.

i. Changes in Directors and Key Managerial Personnel:

The Board of Directors has appointed Mr. Pradeep Poddar, having Director Identification Number 00025199, as an independent director with effect from September 15, 2016, subject to the approval by members. The Company has received a notice from a member intending to propose Mr. Poddar’s appointment as an independent director. The Board of Directors recommends appointment of Mr. Poddar as an independent director for period of three years upto September 14, 2019.

The members, by way of a resolution passed, on March 13, 2014, by Postal Ballot had appointed Mr. Rajesh Mandawewala as Managing Director of the Company with effect from April 1, 2014 for a period of three years. His term expired on March 31, 2017.

The Board of Directors has reappointed Mr. Mandawewala as Managing Director of the Company for a period of five years with effect from April 1, 2017. The Board of Directors recommends approval to appointment of Mr. Mandawewala as Managing Director.

In accordance with the provisions of Section 152 of the Act and the Articles of Association of your Company,

Mr. Balkrishan Goenka is retiring by rotation at the forthcoming Annual General Meeting and being eligible, has been recommended for his re-appointment.

Details about the directors being appointed or re-appointed are given in the Notice of the forthcoming Annual General Meeting.

ii. Declaration by an Independent Director(s):

Your Company has received declarations from all the Independent Directors as per the provisions of Section 149(7) of the Act confirming that they meet the criteria of Independence as prescribed under the provisions of Section 149(6) of the Act and that there is no change in the circumstances as on the date of this Report which may affect their respective status as an Independent Director.

iii. Directors’ Evaluation:

In compliance with the Act and SEBI Regulations 2015, the Board of Directors, as per the process recommended by the Nomination and Remuneration Committee, has evaluated the effectiveness of the Board, its Committees and Directors.

The evaluation process invited graded responses to a structured questionnaire, which was largely in line with the SEBI Guidance Note on Board Evaluation, for each aspect of the evaluation. All the results were satisfactory.

iv. Familiarisation programme for Independent Director(s):

The familiarisation programme aims to provide the Independent Directors with the scenario within the textile industry, the socio-economic environment in which the Company operates, the business model, the operational and financial performance of the Company, significant development so as to enable them to take well-informed decisions in timely manner. The familiarisation programme also seeks to update the Directors on the roles, responsibilities, rights and duties under the Act and other statutes.

The policy on Company’s familiarisation programme for Independent Directors is hosted on your Company’s website and a web link thereto is: http://www.welspunindia.com/policy/ familiarisation_program.pdf.

v. Committees of the Board of Directors:

Information on the Audit Committee, the Nomination and Remuneration Committee, the Stakeholders’ Relationship, Share Transfer and Investor Grievance Committee, the Corporate Social Responsibility Committee and meetings of those committees held during the year is given in the Corporate Governance Report forming part of this Report.

11. Loans, Guarantees and Investments:

Information of amounts of investments made, loans given, guarantees given and security provided by your Company as on March 31, 2017 is as given under:

Rs. Million

Particulars

Amount

Investments

8,249.64

Loans / Receivables

-

Guarantees

7,426.42

Security

-

Total

15,676.06

Corporate Guarantee of Rs.2.20 billion was given to holders of non-convertible debentures (NCDs) issued by Welspun Captive Power Generation Limited (“WCPGL”), a subsidiary of your Company. Proceeds of NCDs were used by WCPGL in refinancing loan of Rs.2.20 billion which was availed for setting up of captive power plant. WCPGL redeemed principal amount of Rs.1.10 billion during the FY 2016-17 Corporate guarantees of GBP 5.10 million and GBP 4.25 million were issued, to Bank of India, UK and Bank of Baroda, UK, respectively, by the Company to secure repayment of working capital facilities availed by CHT Holdings Limited, a subsidiary of your Company.

Similarly, the Company has issued guarantee of Rs.4.47 billion in favour of consortium of Bankers led by erstwhile State Bank of Bikaner and Jaipur (now merged with State Bank of India) (“SBBJ Consortium”) to secure repayment of facilities extended by SBBJ Consortium to Welspun Global Brands Limited (“WGBL”), a subsidiary of the your Company. Disclosures pursuant to the Regulation 34(3) read with Para A of Schedule V of SEBI Regulations, 2015 are given at Notes 34 & 36 of the audited financial statements.

12. Particulars of contracts or arrangements with related parties:

All related party transactions that were entered into during the year under report were on an arm’s length basis and were in the ordinary course of business, to serve mutual need and mutual interest. Except for contracts with WGBL and WCPGL, subsidiaries of your Company, there were no materially significant related party transactions made by your Company. The Audit Committee has given its omnibus approval which is valid for one financial year. Your Company’s policy on Related Party Transactions as approved by the Board is hosted on your Company’s website and a web link thereto is:http://www.welspunindia.com/policy/related_party_transaction_policy.pdf.

Disclosures as required under the Act are given in Form AOC-2 as Annexure - 4 to this Report.

The details of the related party transactions as required under IND-AS 24 are set out in Note 29 to the Standalone financial statements forming part of this Report.

13. Details of Remuneration to Directors and Key Managerial Personnel:

i. Details as required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(a) the ratio of the remuneration of each Executive Director and Key Managerial Personnel to the median remuneration of the employees of your Company for FY 2016-17 is as given below:

Name and Designation

Remuneration (Rs. million)

The percentage increase in remuneration

The ratio of the remuneration to the median remuneration of the employees (no. of times)

Rajesh Mandawewala Managing Director

58.85

(41.89%)

41.45

Ms. Dipali Goenka

CEO and Joint Managing Director

56.45

(42.96%)

39.75

Altaf Jiwani

Chief Financial Officer

25.55

14.06%

17.99

Shashikant Thorat Company Secretary

3.85

13.24%

2.71

(b) The percentage increase in the median remuneration of employees in FY 201617 was 2.1%.

(c) Your Company had 22,375 permanent employees on its payrolls as on March 31, 2017.

(d) The turnover of your Company increased by 12.61% and EBIDTA of your Company increased by 4.01% during FY 2016-17. Median remuneration increased by 2.07%. Increase in median remuneration was in line with the performance of your Company.

(e) Average percentage increase in the salaries of employees other than the managerial personnel in FY 2016-17 was 6.76%. Managing Director and CEO & Joint Managing Director are being paid commission of 1% hence, the managerial remuneration decreased by 35.99%.

The key parameters for any variable component of remuneration availed by the directors are as per the Nomination and Remuneration Policy We affirm that the remuneration is as per the Nomination and Remuneration Policy of your Company.

ii. Details of the employees of your Company as required pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

Name, Designation, Age, DOJ, Current CTC (‘ million), Qualification, Previous Company Nature of Employment, % of Equity Shares held in the Company, Relative of any Director/ Manager of the Company

iii. Ms. Dipali Goenka, CEO & Joint Managing Director, who is receiving remuneration and commission from your Company, receives Rs.15 million as remuneration and commission of 2% of profits also from WGBL, a subsidiary of your Company.

iv. Details of managerial remuneration and payments to other directors are given in the Corporate Governance Report forming part of this Report.

14. Extract of the Annual Return:

An extract of the annual return in Form MGT-9 of the Companies (Management and Administration) Rules, 2014 is attached as Annexure - 5 to this Report.

15. Business Responsibility Report (BRR):

SEBI vide Notification No. SEBI/LAD-NRO/ GN/2015-16/27 dated December 22, 2015 had mandated top 500 listed entities, based on market capitalization, to include BRR in the annual report. Since, the Company being one of the top 500 listed entities, it is pleased to present its 1st BRR for the FY 2016-17 as per SEBI Circular No. CIR/CFD/CMD/10/2015 dated November 04, 2015 which is hosted on your Company’s website and a web link thereto is: http://www.welspunindia.com/environment_management/ BusinessResponsibiliyReport_2016-17.pdf

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo required to be disclosed pursuant to Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 is attached as Annexure - 6 to this Report.

17. Corporate Social Responsibility (CSR):

The key philosophy of all CSR initiatives of the Company is enshrined in the three E’s which have become guiding principles of our CSR initiatives - Education, Empowerment (of Women) and Environment & Health.

The initiatives undertaken by your Company during FY 2016-17 in CSR have been detailed in this Report.

Disclosures as required under Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014 are given in Annexure - 7 to this Report.

18. Internal controls:

Your Company has adequate internal control system, which is commensurate with the size, scale and complexity of its operations. Your Company has designed and implemented a process driven framework for Internal Financial Controls (“IFC”) within the meaning of the explanation of Section 134(5)(e) of the Act, SEBI Regulations, 2015 and other relevant statutes applicable to your Company.

Your Company has well-documented Standard Operating Procedures (SOPs) for various processes which are periodically reviewed for changes warranted by business needs.

The Internal Auditors continuously monitor the efficiency of the internal controls / compliance with the SOPs with the objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance of the adequacy and effectiveness of the organisation’s risk management, control and governance processes.

For the year ended March 31, 2017, the Board is of the opinion that your Company has sound IFC commensurate with the nature of its business operations; wherein adequate controls are in place and operating effectively and no material weakness exists. Your Company has a process in place to continuously monitor existing controls and identify gaps and implement new and / or improved controls wherever the effect of such gaps would have a material effect on your Company’s operation.

19. Risk management:

Your Company is exposed to risks across all levels and functions of the organisation.

The Board has approved Enterprise Risk Management Policy (ERMP) to effectively address financial, operational, business, compliance and strategic risk. A structured enterprise risk management programme has been formulated and implemented. Refer to the Management Discussion and Analysis Section in this Report for risks and threats applicable to your Company.

20. Corporate Governance:

The Company is committed to maintain the highest standards of corporate governance requirements as set out by SEBI. The Report on Corporate Governance as stipulated under SEBI Regulations, 2015 forms an integral part of this Report. The requisite Compliance Certificate is obtained from Mr. Uday Sohoni, Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Part E of Schedule V of SEBI Regulations, 2015, is annexed to the Corporate Governance Report.

21. Management Discussion and Analysis Report:

The Management Discussion and Analysis Report on the operation of the Company as required under the SEBI Regulations, 2015, is provided in a separate section and forms part of this Report.

22. Vigil mechanism:

Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors has formulated Whistle Blower Policy and Vigil Mechanism for its directors and employees and any director or employee may make protected disclosures to the Chairman of the Audit Committee. No personnel have been denied access to the Audit Committee.

a. in the preparation of the annual accounts for the financial year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. the directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for the FY 2016-17;

c. the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the directors have prepared the annual accounts on a going concern basis;

e. the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f. the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

24. Miscellaneous:

During the year, there was no change in the general nature of business of your Company. No material change or commitment has occurred which would have affected the financial position of your Company between the end of the financial year to which the financial statements relate and the date of the report. No significant and material order was passed by the regulators or courts or tribunals which would have impacted the going concern status and your Company’s operations in future. No amount was required to be transferred to General Reserve. Further, based on the Policy on Prevention, Prohibition and Redressal of Sexual Harassment of women at workplace, the Internal Complaints Committee for each location of your Company informed that no case of sexual harassments was reported during the year under review. Your Company has not made any provision of money for the purchase of, or subscription for, shares in your Company or its holding company, to be held by or for the benefit of the employees of your Company and hence the disclosure as required under Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 is not required.

25. Acknowledgements:

Your Directors thank the government authorities, financial institutions, banks, customers, suppliers, members, employees and other business associates of your Company, who through their continued support and co-operation, have helped as partners in your Company’s progress and achievement of its objectives.

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